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Would liberalization lead to epidemic cocaine consumption?

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  • Norman V. Loayza
  • Naotaka Sugawara

Abstract

This article uses cross-country data to estimate the potential effect of drastic reductions in the price of cocaine on the share of the population that consumes this drug. In order to identify movements along the cocaine consumption/demand function, this article instruments for cocaine prices with variables that affect the supply of cocaine. Liberalization of drug policies would produce an increase in the prevalence of cocaine consumption. However, the quantitative evidence presented here suggests that, even if substantial, this increase would not amount to epidemic cocaine use.

Suggested Citation

  • Norman V. Loayza & Naotaka Sugawara, 2012. "Would liberalization lead to epidemic cocaine consumption?," Applied Economics Letters, Taylor & Francis Journals, vol. 19(14), pages 1405-1409, September.
    • Handle: RePEc:taf:apeclt:v:19:y:2012:i:14:p:1405-1409
    DOI: 10.1080/13504851.2011.631882
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    References listed on IDEAS

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    1. Michael Grossman, 2005. "Individual Behaviours and Substance Use: The Role of Price," Advances in Health Economics and Health Services Research, in: Substance Use: Individual Behaviour, Social Interactions, Markets and Politics, pages 15-39, Emerald Group Publishing Limited.
    2. Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2005. "Organized crime, corruption and punishment," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1639-1663, September.
    3. Jeffrey A. Miron, 2003. "The Effect of Drug Prohibition on Drug Prices: Evidence from the Markets for Cocaine and Heroin," The Review of Economics and Statistics, MIT Press, vol. 85(3), pages 522-530, August.
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    Cited by:

    1. Bernal Humberto, 2020. "Demand and Supply in the Cocaine Market: An Empirical Study," Journal of Globalization and Development, De Gruyter, vol. 11(1), pages 1-34, June.

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